The US dollar is trading flat at the opening of the European session, remaining close to the multi-year maximums reached earlier in the month. The latest US inflation figures surprised to the upside, as did employment data, revealing a higher-than-expected number of new jobs created in August. With consumer prices escalating and the economy still giving signs of vitality, investor’ expectations shifted over the last month and now point at a more aggressive tightening path by the Fed. Against this background, the planets seem aligned for the king dollar to continue to dominate the narrative in the foreign exchange markets.
Ricardo Evangelista – Senior Analyst, ActivTrades
Gold
Gold has been trading flat during the early part of Tuesday’s session, remaining close to the 2-year minimum touched at the end of last week. The price of the precious metal is weighed down by the strength of the dollar, with investors bracing for the Federal Reserve rate decision due on Wednesday. The Fed is expected to hike rates by at least 75 basis points, with the possibility of a full percentage point increase. While a 0.75% rate hike is already priced into the value of the greenback, a more aggressive move is not and, if confirmed, would be likely to support further dollar gains and therefore create scope for more gold weakness.
European benchmarks saw significant fluctuations on Tuesday as traders remain torn between macro uncertainties and key technical levels.
Market volatility is on the rise this morning after most EU indices fell sharply to new session lows despite a strong bullish price action following the opening bell, paring some of Monday’s gains.
This volatile trading mood takes place as investors continue to brace for several monetary policy decisions this week – most notably the highly awaited FOMC meeting tomorrow – while short-term traders also seized the occasion brought by hits on key resistance levels to take some profits out following yesterday’s strong rally.
It is however too soon to qualify today’s bearish correction as a “bearish trend resurgence”. Traders continue to assess the macro situation and still wait for crucial speeches and decisions from many central bankers this week, which leads us to expect less directional trends but in an increasingly volatile environment.
The DAX-30 index brings one of the worst performances of the Eurozone this morning as the German benchmark continues its slide towards 12,800pts, its first major support zone.
Pierre Veyret– Technical analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
